How To Attack Credit Card Debt: 0% APR Balance Transfer Cards vs Personal Loans

On my journey to paying off credit card debt, I’ve tried both 0% APR Balance Transfer Cards and a Personal Loan.

Today, I’d like to share a bit about each of these options as it pertains to attacking credit card debt.

I’ll start off by sharing some information about the option. Then I’ll give some pros, and maybe some cons. After that, I’ll share a few things to consider, followed by a couple of suggestions. And finally, I’ll give some feedback for which option could be best for you.

Please bear in mind that I am not a Financial Adviser, or specialist. I’m simply sharing things I’ve learned along my personal journey to eliminating credit card debt.

Let’s get into it.

0% APR Balance Transfer Cards

0% APR Balance Transfer Cards allow you to transfer your credit card balance from one card to another card.

You pay 0% APR (interest) on the balance transfer amount for a period of 6 -21 months.

*New purchases made using these cards may be subject to a different interest rate, so be sure to review your card’s term as well as the cardholder agreement.


You won’t be throwing money away on interest during the introductory period, which means that your entire monthly payment will go toward paying off your balance (provided that you don’t make any other charges on the card). Therefore, you’re able to pay the card off faster.

A Few Things To Consider

◙ There may be a balance transfer fee – either a percentage of the amount you’re transferring or a minimum fee (ex. 5% transfer fee, or $10 min), which will be added to the card as an additional charge. The transfer fee varies from card to card. You may be able to avoid this fee if you request the balance transfer during the credit card application.

◙ If your transfer balance isn’t paid off by the end of the introductory period, the remaining transfer balance is subject to your card’s APR.

For example, let’s say that you transfer $1500 and the card offers a 0% APR on balance transfers for a 9 month period. At the end of the 9 months, you’ve paid $900 but you still owe $600. You’ll pay the card’s regular interest rate on the remaining $600 until you’ve paid it off.

In rare instances, some cards will charge interest on the entire transfer balance of $1500, until it’s paid off (even though you only owe $600 at this point).

Interest will beginning accruing at the 9 month mark (not from the date you opened the card) and will continue until the entire transfer balance has been paid in full.

Again, be sure to familiarize yourself with your card’s terms and read through the cardholder agreement.


♥ Have a plan and stick to it.

Going back to our example where you have 9 months to pay off $1500. You’d need to pay $167 (roughly) each month to pay it off in time.

Can you commit to paying $167 for the next 9 months?

Do you already have the money in your budget?

If not, how will you be able to afford the $167 each month?

♥ Shred those puppies and don’t look back.

Trust me on this one.

Shredding your cards eliminates the temptation to use them.

And be sure to delete the stored card numbers from your favorite shopping sites too.

I know, I know.

But the goal is to refrain, as best as you can from making new charges, since each new charge sets you back from paying off your debt.

And that’s the goal, right?

Personal Loans

A personal loan is a specific type of loan that you borrow from a bank, credit union, or online lender. You borrow a specific dollar amount for a specific amount of time (ex: $10k, for 24 months).

Personal Loans can be obtained for various reasons, but in this case, it will be for debt consolidation.

Personal loans can have a fixed rate APR, or a variable APR. The interest rate on a fixed rate loan will never change, but it will change over time on a loan with a variable APR.

For the purpose of this conversation, we’re only talking about fixed rate personal loans because their payments are predictable, meaning they won’t go up, or down, over time.

You can either obtain a secured, or unsecured, personal loan.

Secured means that it’s backed by collateral. A car title, or a piece of property are types of collateral. If you default on your loan, the lender can keep the collateral. These are easier to obtain for people with bad credit, because it’s less risky for lenders. Even if you have good credit, putting up collateral might net you a lower APR.

Unsecured means it’s not backed by collateral. Factors such as your credit standing, current income, housing payment, debts, as well as others, determine whether you’ll be approved.

For the purpose of our conversation, I’m speaking of unsecured personal loans.

If you’re considering secured personal loans, or variable APR personal loans, I encourage you to do your research to ensure these are well suited to your situation.


♥ You’re monthly payment won’t go up or down over time, so you’ll know exactly what to budget for each month.

♥ A personal loan can help you become debt-free within a specific time frame, since you’re guaranteed to pay off your loan provided that you make your payments on schedule.


♦ You’re going to pay interest right off the bat, unlike with a 0% APR Balance Transfer Card in which you don’t pay any interest during the introductory period.

♦ You’re likely to be charged upfront fees, whether those are origination fees, processing fees, or administrative fees. This is usually a small percentage of your loan amount.

Most lenders subtract these fees from the amount you’re requesting to borrow.

Lets say that you need $12k to pay off your debt, and your lender charges 4% origination.

That comes to $480.

Let’s say you request and are approved for $12,000. They will disperse $11,520 ($12,000 – $480).

In order to obtain the $12,000 you need to pay off your debt, you’d have to request a loan for $12,480 ($12,000 + $480).

A Few Things To Consider:

◙ The APR is the cumulative interest rate you paid for a loan, expressed as an annual rate. It factors in the loan’s interest rate, origination fees, finance charges, etc.

◙ If you miss a payment, or if your payment is late, your interest rate might skyrocket for the remainder of your term.


♥ To ensure that you request enough to pay off your debt, consider the lender’s upfront fees.

♥ Look at the complete picture versus focusing on any one metric. Weight each factor against one another (fees, APR, term, etc.), as well as other loans to determine which loan is best for you.

♥ When comparing personal loans, also look at the “estimated dollar amount this loan will cost you”, which factors in the interest rate and fees.

♥ If you think you may pay your loan off ahead of time, make sure your lender won’t charge you to pay it off early (a/k/a pre-payment penalties).

So, Which One Should You Choose?

Personal loans can be very effective for the undisciplined, provided that you get a good APR. Sure, you’ll pay interest starting on day 1, but you’ll also have your loans paid off by a specific date, provided that you make your payments on time.

A 0% APR Balance Transfer Card is a better option if you: have a plan and stick to it; have the means to pay off your balance; are disciplined enough to pay it off during the introductory period. You can avoid interest altogether if you play your cards right.

Truth be told, they’re both good vehicles for paying off credit card debt. You just have to ask yourself – which type of driver am I?

All the Best,
♥ Ash